Technical View: Nifty forms bullish candle, 11,042 crucial for more upside
Buoyed by positive global cues, Nifty gained for the fourth straight day and closed above 11,000 on September 9. Banking and financials, auto and FMCG stocks did the job.
The index closed marginally above its 21-day exponential moving average and formed bullish candle on daily charts, indicating bulls may be consolidating for major upside in coming sessions.
It is forming higher highs – higher lows from past three trading sessions and supports are gradually shifting higher. Experts feel if the index breaks its crucial resistance 11,042, then there could be a strong rally towards 11,150-11,200.
After opening lower at 10,936.70, Nifty witnessed selling pressure and hit an intraday low of 10,889.80, but after an initial hour of loss, the index rebounded and remained in uptrend for rest of session to hit day’s high of 11,028.85. It closed 56.80 points higher at 11,003.
“Bulls appear to be slowly consolidating their position as Nifty closed in the positive terrain for 4th consecutive session in a row. However, bigger thrust from the index is expected on a close above 11,042 levels. In such a scenario, the index can initially head towards its 50-day exponential moving average (11,174),” Mazhar Mohammad, Chief Strategist – Technical Research & Trading Advisory, Chartviewindia.in, told Moneycontrol.
He said 10,800 can be considered as a critical support in the near term.
According to Mazhar, traders who are already long should continue to hold their bets with a stop below 10,880 on closing basis and look for initial target of 11,170.
On the options front, maximum Put open interest was seen at 10,800 followed by 10,600 strike while maximum Call open interest was seen at 11,200 followed by 11,500 strike.
Minor Call writing was seen at 11,200 strike while Put writing was seen at 10,900 and 11,000 strike. Option data suggests the Nifty could trade in a range of 10,700-11,200 levels.
India VIX fell by 2.57 percent to 15.85 levels.
Bank Nifty managed to hold 27,000 levels and gradually extended its gains towards 27,550 levels. The index gained 0.94 percent to close at 27,504.65 and formed a bullish candle on daily scale.
“The index started to form higher lows from past three trading sessions. Supports are gradually shifting higher and now it has to continue to hold above 27,350 levels to witness a bounce towards 27,750 then 28,000 levels while on the downside supports are seen at 27,250 then 27,000 levels,” said Chandan Taparia, Associate Vice President | Analyst-Derivatives at Motilal Oswal Financial Services.Get access to India’s fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code “GETPRO”. Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.